The purpose of this paper is to revisit the disastrous DaimlerChrysler AG takeover episode from 1998 to 2007 in order to arrive at a more comprehensive explanation of this and other merger and takeover failures based on institutional theory.
The case study is based on various secondary sources of information and on the insights that one of the authors gained from working for 14 years in various positions for Daimler-Benz and DaimlerChrysler.
DaimlerChrysler failed because top management made mistakes in trying to globalize the company. They were unable to realize possible synergies between the two companies, which brought complementary resources into the merger. Furthermore, they did not account for the institutional embeddedness of strategies when they adopted lean production globally, diffused the production system developed in Germany to other parts of the world and tried to implement a global stock enlisted in New York and Frankfurt. The underlying theoretical framework is relevant for other merger and acquisition cases. It features institutional embeddedness, path dependency and institutional arbitrage.
The paper develops an institutional perspective on DaimlerChrysler and on cross-border merger and acquisition failure more generally. The perspective is organized around the varieties-of-capitalism approach. This contribution is important because there is increasing dissatisfaction with the dominant explanation of cross-border merger and acquisition failure, which is based on the allegedly failed management of culture “clashes.”
The authors wish to thank the Editor Dr Ronaldo Parente as well as two anonymous referees for their constructive and helpful suggestions for improving previous versions of this paper. Much of the research work and some of the arguments in this paper go back to the first author's dissertation thesis (Riach, 2013).
Riach, J.R.W. and Schneider, M.R. (2022), "The DaimlerChrysler takeover failure revisited from a varieties-of-capitalism perspective", Cross Cultural & Strategic Management, Vol. 29 No. 3, pp. 552-568. https://doi.org/10.1108/CCSM-12-2020-0250
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